Building the practice of the future: leveraging technology to transform productivity

New technologies are transforming the way we access and use a range of financial services – from financial apps to facial recognition technology and artificial intelligence. And they are having an impact on financial advice practices too.

Engaging clients more effectively

New research¹ from Investment Trends indicates that many practices are using a range of technologies to increase efficiency and service their clients effectively.

To undertake the research, Investment Trends analysed data from a comprehensive quantitative survey of 345 practices across the country – scoring each practice on a range of performance indicators, then analysing the features that make top-scoring practices stand out. Top scoring practices are those scoring in the top 20% of those surveyed. According to Recep Peker, Research Director at Investment Trends, technology adoption was a key difference.

“Financial planners in Australia are quite tech savvy as a whole, so it’s a relative rather than an absolute difference,” he says. “However, we did find a consistent trend towards higher adoption of new technologies by top-scoring practices across a range of areas – particularly in relation to using tools that help them engage with their clients or achieve a greater level of efficiency.”

Research shows that there are not one or two types of technology that all top-scoring practices are using, but that many types of technologies are being used for various purposes. There is a trend for top-scoring practices to be utilising these technologies at a greater rate than when compared to the average. The research shows that top-scoring practices are more likely to use regular digital newsletters (63% compared to the average of 56%), provide online access to clients to view their financial position (49% compared to the average of 36%) dedicated CRM software (35% versus an average of 29%), automated marketing campaigns (37% versus an average of 24%) and digital signatures to streamline client service (21% versus an average of 16%).

Finding the right technology solutions

Kon Costas has worked across the wealth management spectrum over the past three decades, with experience spanning from banking, financial planning and business coaching to dealership development in companies such as Bendigo Investment Services, Lonsdale Financial Group and BT Group Licensees. Today, Kon is the Head of Services of BT Open, applying his knowledge of the financial advice industry to help self-licensed practices with their businesses. He says that while there is not yet a technology solution in the market that is regarded as the ideal end-to-end service for advice businesses, he is seeing successful practices use a suite of different technologies to great effect.

“The amount of technology they’re using is incredible. Since there’s not one silver bullet when it comes to technology, practices are looking for solutions for individual challenges – such as video conferencing, digital signatures, appointment booking systems and digital filing,” he says.

“The beauty is that these technologies are now starting to talk to each other. New providers coming into the market are working out how to cut across the different CRMs and integrate all of that data. We’re seeing data mining and data interrogation systems coming into play. It’s opening up different avenues for practices.”

“The key is to choose technology that complements and streamlines your business processes, rather than building processes around technology,” he says. “The aim is to simplify or automate as many back-office activities as possible, maximising productivity and freeing your staff to focus on clients, rather than administration.”

Putting technology to work in your practice

Kon Costas lists four ways in which practices are successfully using technology today:
1. Using digital filing to create compliant and robust client records that can be accessed by everyone in the office who need to access those records
2. Setting up an automated workflow system that gives visibility across every project in the business
3. Focusing on technology that improves the client experience – from digital signatures to online educational sites
4. Wherever possible, integrating best-in-class solutions to share data and reduce duplication – for example, enabling automated data feeds between investment, banking and SMSF administration platforms

Developing a technology strategy

When choosing the right technology solutions for your business, a slow and careful approach is often best. Taking the time to research different options and develop a plan for incorporating new technology into your business can lessen the impact of the change for staff and clients.

Andrew Walsh, CEO of IRESS, says that in his experience, the practices that have achieved the most success with technology adoption are those that have a clear change management plan in place. He urges practices to prioritise their business strategy over their technology strategy.

“Today it is too easy to chase technology dreams before business strategy, which nearly always negatively impacts outcomes and, therefore, cost,” he says.

“Getting clarity on the business strategy upfront properly frames the next stage - assessing the cost-benefit analysis of technology. It is important not to consider cost in isolation. Practices successfully integrating technology in their businesses first have a sound understanding of the direction of their business, and then they can assess what technology is needed.”

Investing in the future

Emerging technology is already making a significant impact on the financial advice industry – but there are many areas of the advice process where improvements still need to be made.

Paul Howes is the National Sector Leader, Asset & Wealth Management at KPMG Australia. He believes the financial advice industry can benefit from looking to other parts of the world – and outside of financial services – for examples of how technology can transform an entire industry.

“We should look at industries and sectors that have cracked digital interplay for models that might operate into the future,” he says. “Transformation is not about how we replace manual processes with automated processes. It’s about changing the way in which the whole customer interface operates.”

“Think about the way in which Uber has transformed the transport industry, and the way our online travel aggregators have transformed the tourism industry. These are the kinds of lessons we need to learn so we can develop different models of advice.”

1. The findings in the BT Financial Practice of the Future Report are based on 345 valid responses to the 2018 Investment Trends Planner Business Model Report. This quantitative survey was conducted in May 2018 and published in June 2018.

To identify the characteristics of successful practices, BT asked Investment Trends to assign each of these 345 respondents a score between 0 and 10 for the following criteria:

Revenue turnover per planner

Number of new clients acquired in the last 12 months

Profitability growth (adjusted for the age of the practice)

The three scores for each respondent were added together to obtain a total score, which was then ranked. This gave three segments: 73 high-scoring practices (top 20%), 201 middle-scoring practices (middle 60%) and 71 low-scoring practices (bottom 20%).

How having a deep and meaningful conversation with your clients can improve retention, increase referrals and deliver better outcomes.

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